Why Buying Insurance Across State Lines is Stupid

Ezra Klein points out the (very) obvious flaw in the Republican’s major contribution to ideas for health care reform, namely allowing people to buy insurance from out of state:

The industry would put its money into buying the legislature of a

small, conservative, economically depressed state. The deal would be

simple: Let us write the regulations and we’ll bring thousands of jobs

and lots of tax dollars to you. Someone will take it. The result will

be an uncommonly tiny legislature in an uncommonly small state that

answers to an uncommonly conservative electorate that will decide what

insurance will look like for the rest of the nation.

This is exactly what the credit card industry did with obvious results. Writes Klein:

(The Credit Card industry) is regulated in accordance with conservative wishes. In 1980, Bill

Janklow, the governor of South Dakota, made a deal with Citibank: If

Citibank would move its credit card business to South Dakota, the

governor would literally let Citibank write South Dakota’s credit card

regulations. You can read Janklow’s recollections of the pact here.

Citibank wrote an absurdly pro-credit card law, the legislature

passed it, and soon all the credit card companies were heading to South


Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.